Highlights of the Debate on the MND Town Council Review Report
By Leong Sze Hian
MND Minister and PAP Chairman, Khaw Boon Wan delivered a 28 minute Ministerial Statement which basically reiterated what was said in the MND Town Council Review Report.
The Minister then moved for the subject to be considered by Parliament, and the Speaker then asked MP Teo Ho Pin, Co-ordinating Chairman of the PAP Town Councils to speak.
He spoke for 15 minutes. He basically reiterated what he said in the PAP Town Councils’ press statement of 2 January, 2013.
Cost savings from joint-tendering
Mr Teo also spoke at length emphasizing with several examples why residents benefit from economies of scale and cost savings because of the joint-tendering system of the PAP town councils.
Although he mentioned that the new software contract was awarded in March 2013 for $16.8 million – what was perhaps conspicuously absent was any mention of the cost paid to develop the existing software system jointly developed by the town councils in 1994.
Software cost $23.8m
MP Sylvia Lim (in her subsequent speech) kind of dropped the bombshell when she said “The TCMS was developed with $23.8 million of TC operating funds (MND report para 13); surely there is reason to retain ownership and control over it for the residents in the 82 electoral wards then under their charge?”
Software almost obsolete
Ms Sylvia Lim said, “Much ado is being made in the report that the second generation (2G) TCMS was “almost obsolete and had limited value” (MND report para 19), but does this mean it is of limited value to the TCs using it now?
If the system ceased to function without replacement, TC operations would grind to a halt!”
Ms Sylvia Lim remarked, “Another incomprehensible justification is the saving of $8,000 for the 14 TCs that arose from the sale (MND report para 26(a)). The $8,000 saving is the difference between the $140,000 paid by AIM and the sums paid by the TCs back to AIM during the one year leaseback.”
Comment: How much did Aljunied-Hougang Town Counil (AHTC), and Hougang and Potong Pasir town councils pay to develop their systems in the past – so that we may have some reference for comparison – as they presumably perform similar functions?
Historically higher S & CC?
Ms Sylvia Lim asked, “Also, given the cost savings from joint tenders, why is it that the PAP town councils have historically, generally had higher S & CC fees than the opposition wards, despite getting more grants from the Government?”
Aljunied had highest S & CC
In this connection, MP Pritam Singh (in his subsequent follow-up remarks) said that Aljunied town council had the highest S & CC of all the town councils under ex-MP George Yeo prior to GE2011 and the new town council had actually reduced the S & CC after they took over following the last elections.
Risking disruption and wastage of public funds
MP Silvia Lim: “MND fell short in not admonishing the PAP TCs for risking disruption to the public in the name of politics. MND also did not take cognizance of the wastage of public funds incurred when such terminations required replacement systems to be set up.”
How many companies have all directors with town council experience?
Ms Sylvia Lim asked, “The tender was advertised and 5 companies picked up the documents. However, a closer look at the Conditions of Contract will reveal that the specifications required each of the directors of the tendering company to have “adequate experience with the operations and functions of a Town Council”.
I wonder how many companies in the software business in Singapore can say that all their directors have TC experience – perhaps only AIM?”
Cannot find “no price increase” clause
Ms Sylvia Lim says, “The PAP TCs told MND that one of the key reasons for selling the software to AIM was that AIM agreed to bear the risk of any price increases by NCS in maintaining the software, even after the original contract with NCS expired (MND report para 25(b)). We have not been able to find this exact clause in our documents. However, even assuming so, on what objective basis did the PAP TCs assess that it was safe to entrust this risk of cost increases to a company with a paid-up capital of $2? Who will pay in the event of a cost increase? What about the risk of AIM being wound up?”
Mr Khaw later replied that even though AIM is a $2 company but it is a $2 company owned by PAP and PAP would fully support AIM in fulfilling its obligations.
The PAP TCs highlighted AIM’s “track record”, but based on the tender documents we have seen, AIM listed only one prior project, also a sale and leaseback. When AIM was asked to fill in a table indicating the identities of their key technical and professional staff, a line was drawn across the table with only one word typed in: “Outsourced”.
Already have variation clause
Mr Png remarked, “Some attempt was made to explain why termination may be fair in the case of a change in boundaries: it was said that the contractor might be faced with a much larger town than anticipated, but be held to a fixed price to his detriment (MND report para 3(e)). I am not sure why there was this worry. At that time, the TCMS was being developed for the whole of Singapore except 2 SMCs viz. Potong Pasir and Hougang. In addition, the contract itself already provided for a variation in price based on the number of property units!”
Properties transferred to PA
Mr Pritam Singh talked about the problems that AHTC faced when they took over, such as the transfer of 26 properties to the People’s Association (PA) by the Housing Development Board (HDB) and the denial of HDB upgrading to opposition wards in the history of Singapore .
Issue with AHTC’s contracts
Ms Denise Phua said something along the lines that – it never crossed the minds of the PAP MPs and town councillors to trip the opposition – it is a figment of the imagination of some party – our conscience was and is clear. She also took issue with the AHTC’s awarding of some of its contracts – it is not helpful to point finger at any one political party.
Obsolescence advice in 2009
MP Silvia Lim sought clarification from Denise Phua to re-confirm what she said about the consultants D & T advising about the software’s obsolescence in 2009, as the sale contract with AIM was 3 January, 2011.
Denise Phua clarified that discussions had started in 2009 because of D & T’s advice about the software obsolescence.
Comment: Since the software obsolescence was first known and commenced discussions in 2009, why did it take more than a year to sell to AIM in January 2011, and then take more than another 2 years to call for a tender to develop a new system in March 2013 – and how long more before the new system will be ready?
1 month termination get better deal
MP Teo Ho Pin clarified that the one month termination clause was to get a better deal so that the risk of the tenderer is lower and that the tenderer could offer a better deal.
Who owns new system?
In response to MP Png Eng Huat’s question as to who would own the new system that is being developed – Teo Ho Pin’s response was that NEC will own the software – the town councils only lease the software.
Issues with FMSS
Minister Khaw Boon Wan said in his round-up speech and subsequent responses that AHTC had awarded a contract to FMSS without a tender.
The town council financial rules allow for a waiver of tender, and in this case of AHTC, MND did not intervene.
FMSS was formed by people closely
associated with the Workers’ Party – former Hougang town council General Manager, spouse, were contractors to Hougang town council, Secretary and Deputy Secretary of Hougang town council, who were also assentors and proposers for Yaw Shin Leong’s candidacy during the elections, etc.
FMSS was only formed on 15 May, 2011 – 4 days after the elections
FMSS was awarded a $5.2 million contract without a tender, and one year later was the only tenderer awarded a 16.8 million 3-year contract, etc.
Ms Sylvia Lim’s response was that there are only 3 companies providing town council management services and all 3 were doing business with the PAP town councils, and the incumbent managing agent actually asked to be released from providing services to AHTC.
So, they had no time to call a tender in the first year and nobody else tendered a year later.
She also explained that they complied with the conditions to waive a tender – urgency in the public interest – termination clause for service to be cut-off – time was running against us – As for the sole tender a year later, a special audit was conducted due to the sole tender and the auditing firm found the company complying to all requirements of the tender.
Insufficient information in tender forms
Mr Khaw responded that as to Ms Sylvia Lim’s remarks that “one of the companies which picked up the tender forms had told the media that there was insufficient information in the tender documents to make a decision whether to tender (The New Paper, 5 Jan 2013, page 6)” – the prospective tenderer could always seek clarification.
Ms Sylvia Lim then rebutted that one of the prospective tenderers had actually asked for more information after paying more than $200 for the tender document, but the town council was unable to provide them with more information, according to a New Paper report. Did the review committee check with the other tenderers on this?
Conflict of interest?
As to NCMP Lina Chiam’s “How can the Review report say that there was no conflict of interest in the AIM transaction, simply because ‘no one made money’? I am not sure if any lawyer will be satisfied with how ‘conflict of interest’ is defined here” – Mr Khaw’s response was that the review team had consulted the Attorney-General (AG) on the legal position of the town councils’ conflict of interest.
Not ordinary $2 company
Mr Khaw said that a $2 company would raise a red flag. AIM is not an ordinary $2 company – but was set up by the PAP to help PAP MPs do a better job – that is the difference between AIM and any other $2 company – Did AIM perform as required? – AIM performed its duties successfully.
He also said that the one month’s termination helps reduce the vendor’s business risk and fetch a better price.
Who’s playing politics?
Mr Khaw exclaimed – Are we stupid? – why would we disrupt the lives of the residents of Aljunied – who would get the blame – how would we hope to regain Aljunied? – As to the remarks “residents as collateral damage in a bigger political game” – I am disappointed - the biggest political gain is to regain Aljunied – indeed who has been playing politics?
Why didn’t write for extension?
Mr Khaw asked, “Why didn’t she (Sylvia Lim) just write to AIM for extension , instead of thinking that AIM will terminate the contract?”
Follow Sitoh Yih Pin’s example
Mr Khaw remarked, “Follow Sitoh Yih Pin’s example in their taking over of Potong Pasir – with minimum disruption to residents – professionally.”
Why wait 18 months to raise issue?
Mr Khaw asked, “Why didn’t she raise the issue in 2011? – wait 18 months until December 2012 to bring it up – the complaint? – Distracting the public from the actual situation in the town council.”
Ms Slyvia Lim’s response – “Why didn’t raise earlier – because we were busy – we needed the public to see the sting of the clause so that they will understand.”
FMSS charge more
Mr Khaw states that FMSS’s charges for EMS is 20 per cent higher than George Yeo’s time.
Ms Sylvia Lim’s response to this was – that’s affected by inflation, I have to check – compare apples to apples.
Opposition wards not excluded from upgrading
Mr Khaw also said that residents in opposition wards are not excluded from upgrading projects – priority to older towns – this year given 3 projects – 2 in Hougang and 1 in Aljunied.
Town council refuse to co-operate
Said by Mr Khaw, “A town council – I will not name the town council – refuse to co-operate in upgrading works – and who gets the blame – the HDB.
I tell all my MND staff – treat all town councils fairly and objectively.”
Potong Pasir’s experience
In this connection, NCMP Lina Chiam had said earlier in her speech,
“When the Town Councils Act was passed in 1988, it was said that the Government wanted to make life harder for Opposition MPs in running their constituencies.
Nevertheless, Potong Pasir Town Council, the only Opposition-held town council then, took up the challenge. We worked hard to run the town. I believe we did a good job, and I believe we earned the trust of our residents throughout 27 years.
But a lot of unfair obstacles were thrown at the Potong Pasir Town Council.
To obtain CIPC funds, we had to seek the endorsement of the Advisor of the Residents’ Committees, who had always been the PAP’s candidate for the constituency.
Indeed, no Opposition politician has ever been allowed to become the Advisor of the RCs, even when that politician is the sitting MP for that constituency.
When it was under the Opposition, Potong Pasir did not obtain a single cent from the CIPC fund or any HDB-related funding. The sole exception was funding for improving barrier-free accessibility, granted in 2010. That was, after all, a nation-wide exercise for wheel-chair bound residents.”
Losing candidate as advisers?
As to NCMP Lina Chiam’s question to Mr Khaw – whether will still appoint advisers even though they are not the elected MP – his short answer was – “that does not come under my purview”.